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2008 (11) TMI 277 - ITAT BOMBAY-HBlock Assessment - Quantum of undisclosed income - Search And Seizure - Whether the addition could be made on the basis of a statement or affidavit given by the managing director for all the companies put together on an ad hoc or on a very general manner? - HELD THAT:- Such an addition cannot be made under the facts and circumstances of the case especially in the absence of any evidence in the form of seized material and that too in the case of a block assessment. The AO should base his additions on evidence found - first appellate authority has rightly held that the statement under s. 132(4) would be evidence for the fact of inflation of the expenses, but at the same time it could not be evidence for the quantum of addition. Whether the addition in question does not fall within the ken of Chapter XIV-B for the reason that all these expenses are already recorded in the books of account prior to the search? - HELD THAT:- The facts of the case are that the assessee himself not only agreed by way of a statement and affidavit that there has been inflation of expenditure and recording of bogus expenditure, but also filed a return disclosing certain expenditure claimed as expenditure in the regular books of account as undisclosed income. Sec. 158B(b) has been amended by the Finance Act, 2002 w.e.f. 1st July, 1995 wherein any expense, deduction or allowance claimed under the Act which is found to be false is defined as undisclosed income. When the assessee himself, suo motu declares undisclosed income under this category, it is not correct to argue to the contrary that the addition is not within the jurisdiction of Chapter XIV-B. Quantum of addition - HELD THAT:- The AO has not furnished any basis whatsoever to come to the conclusion and to the quantum except relying on the general statement made by the managing director. To certain extent, the assessee has made certain analysis of unvouched expenditure and has produced some records before the AO, which give a particular percentage of expenditure as unsupported. In a block assessment no addition can be made unless material is found during the course of search. In other words, the addition should be based on material found during the course of search. As the AO has failed to bring out any evidence in support of the addition, we have no other alternative but to delete the additions made to the returned income - all the additions made to the returned income in all the companies is deleted. The appeals filed by the assessee are allowed and the appeals filed by the Revenue are dismissed.
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